Court of Appeal Reverses Trial Judge, Finds Cause and Awards Costs to Employer

In the fall of 2014, Justice Lemon of the Ontario Superior Court of Justice decided that a private school had wrongfully dismissed a teacher who had committed academic fraud by submitting grades he knew to be inaccurate and then lied about it when confronted.  The decision seemed all the more egregious as, in addition to awarding the teacher 12 months’ salary and benefits, the Court also found the teacher became disabled following the termination of his employment and was entitled to disability benefits in addition to $130,000 of legal costs awarded on a substantial indemnity basis. 

In a June 2016 2:1 split decision, the Ontario Court of Appeal has reversed this decision, restored my personal faith in the justice system and reflected on the test for just cause.  In particular, the Court of Appeal reinforced that the “core question” is whether the employee’s misconduct is sufficiently serious to strike “at the heart of the employment relationship”.  In this case, the Court of Appeal found that the trial judge failed to assess the seriousness of the teacher’s misconduct in a meaningful way.  The majority of the Court of Appeal found that “one of a teacher’s most important professional obligations is to fairly and properly evaluate and assess student progress and achievement”.  The teacher’s actions here was intentional and, therefore, constituted serious misconduct.  There were no circumstances to excuse or mitigate the misconduct.  

The other critical finding on the part of the majority of the Court of Appeal is that the school could have suffered serious harm because of the teacher’s misconduct and what was most important was the severity of the potential harm, not that it was not actually suffered.  As the teacher’s misconduct put the school’s continued operation as an accredited private school in jeopardy and destroyed the school's trust in the teacher, the misconduct amounted to just cause for dismissal. The majority of the Court of Appeal dismissed the action and awarded the school $105,000 in costs for the trial and appeal.

When the trial decision came out, those of us who advise employers and are well aware of just how high the just cause threshold is were at a loss to understand how dishonesty about something so fundamental to an employee's job could not amount to just cause for dismissal.  Trying to explain this to clients was even more difficult.  The trial decision seemed to suggest that no conduct, no matter how egregious could meet the just cause standard.  The majority of the Court of Appeal's decision applies a common sense approach to the just cause standard; it doesn't lower it.  The circumstances in which just cause will be found are still limited, but they do exist. 

See Fernandes v. Peel Educational & Tutorial Services Limited, 2016 ONCA 468 (CanLII).